House value dropped - what happens now?
Discussion
MagicalTrevor said:
groak said:
MagicalTrevor said:
The house dropped 25%!
Basically; developer built the street (3 bed houses) and was renting and selling them as time went buy. He's now struggling with cash-flow (so I believe) and has therefore dropped the price of the final house in his portfolio just to get shot.
I imagine he'll still make a profit on the final house and doesn't care that it devalues the entire street. There is nothing I can do about that, his house, up to him what he sells for.
So we now have a house that the developer himself has devalued lower than the Market average and has screwed us over.
If it was just a drop inline with the market then we could deal with that and move on.
You could be worrying about nothing. The developer has basically created 'forced sale' conditions by reducing price artificially to generate a fast sale. That doesn't mean your house is worth what he has to take to get rid of it quick, unless you need to get rid of yours quick too (which you don't).Basically; developer built the street (3 bed houses) and was renting and selling them as time went buy. He's now struggling with cash-flow (so I believe) and has therefore dropped the price of the final house in his portfolio just to get shot.
I imagine he'll still make a profit on the final house and doesn't care that it devalues the entire street. There is nothing I can do about that, his house, up to him what he sells for.
So we now have a house that the developer himself has devalued lower than the Market average and has screwed us over.
If it was just a drop inline with the market then we could deal with that and move on.
The only real value, though, is what someone will pay. Most buyers won't ever know what the last house went for even now, but in six months, this one cheap sale will be all but forgotten.
NorthernBoy said:
The only real value, though, is what someone will pay. Most buyers won't ever know what the last house went for even now, but in six months, this one cheap sale will be all but forgotten.
And what someone will pay is now being set by the mortgage lender and they don't forget, I think you'll find they actually check these days.mattley said:
NorthernBoy said:
The only real value, though, is what someone will pay. Most buyers won't ever know what the last house went for even now, but in six months, this one cheap sale will be all but forgotten.
And what someone will pay is now being set by the mortgage lender and they don't forget, I think you'll find they actually check these days.That's just ridiculous. I'm in the process of buying a flat at the moment, with a mortgage of over half a million pounds, and the surveyor sent out to do the valuation had no idea what flats round here go for, and had to ask my estate agent what he thought it was worth.
Your faith in the diligence of retail banks' staff is touching, but not very realistic. The idiots dealing with mine likely have trouble wiping their own arses, let alone using a multi-factor pricing model.
The sale of one property at a discounted price will not bring the whole local market down. If the developer sells the last property at a 25% discount, equating to a below market price, there will be one lucky buyer. Future buyers in the area will have to pay market rates. You just need to wait for the property to sell before you can put yours on the market.
NorthernBoy said:
mattley said:
NorthernBoy said:
The only real value, though, is what someone will pay. Most buyers won't ever know what the last house went for even now, but in six months, this one cheap sale will be all but forgotten.
And what someone will pay is now being set by the mortgage lender and they don't forget, I think you'll find they actually check these days.That's just ridiculous. I'm in the process of buying a flat at the moment, with a mortgage of over half a million pounds, and the surveyor sent out to do the valuation had no idea what flats round here go for, and had to ask my estate agent what he thought it was worth.
Your faith in the diligence of retail banks' staff is touching, but not very realistic. The idiots dealing with mine likely have trouble wiping their own arses, let alone using a multi-factor pricing model.
If it's not one of these firms, it is equally possible that whichever Surveyor sees it will look at Sold prices (which are freely available). Just depends how easy it is to compare, as these are less detailed, so unless you know that it's the same house type there can be doubt. (Google Streetview now a help).
Valuation is always a tricky one - but its naive to really think these days that they do not carry out the due dilligence else they are doing their client a disservice/may lose future contracts.
Some survayors Ive heard take the area average price and then apply a further % discount from that to provide even more cover for the bank - so either forcing the buyer to find more equity to put in OR force the buyer to lower their expectations.
I know of 1 couple who earn a solid c£45k each and have £30k deposit and just cannot even get a £250k mortgage... it is tough out there, 4 years ago they could easily bought on 95% LTV & easily 5times total mortgage would have been £450k + deposit. ...
Hence they have no choice but to rent. No other debts and own cars outright (nothing special under 8 years old. Im guessing their savings will ramp up notably going forwards or they may leave the UK to a country without such high costing property nor the sovrign debt/defecit issues.
Finland anyone? Virgin Isles..
Some survayors Ive heard take the area average price and then apply a further % discount from that to provide even more cover for the bank - so either forcing the buyer to find more equity to put in OR force the buyer to lower their expectations.
I know of 1 couple who earn a solid c£45k each and have £30k deposit and just cannot even get a £250k mortgage... it is tough out there, 4 years ago they could easily bought on 95% LTV & easily 5times total mortgage would have been £450k + deposit. ...
Hence they have no choice but to rent. No other debts and own cars outright (nothing special under 8 years old. Im guessing their savings will ramp up notably going forwards or they may leave the UK to a country without such high costing property nor the sovrign debt/defecit issues.
Finland anyone? Virgin Isles..
Welshbeef said:
I know of 1 couple who earn a solid c£45k each and have £30k deposit and just cannot even get a £250k mortgage... it is tough out there, 4 years ago they could easily bought on 95% LTV & easily 5times total mortgage would have been £450k + deposit. ...
Hence they have no choice but to rent. No other debts and own cars outright (nothing special under 8 years old. Im guessing their savings will ramp up notably going forwards or they may leave the UK to a country without such high costing property nor the sovrign debt/defecit issues.
£90k combined earnings and only £30k savings? They need to save harder!Hence they have no choice but to rent. No other debts and own cars outright (nothing special under 8 years old. Im guessing their savings will ramp up notably going forwards or they may leave the UK to a country without such high costing property nor the sovrign debt/defecit issues.
Because of the max LTV on my mortgage the surveyor's valuation has capped the size of the mortgage to below what I wanted.
It's a bit weird, they waved far more in our faces at the application stage than we wanted, and then knocked it well back after the survey, almost as wish they never really wanted to lend the higher amount.
We are now borrowing only 1.5 times our salary.
It's a bit weird, they waved far more in our faces at the application stage than we wanted, and then knocked it well back after the survey, almost as wish they never really wanted to lend the higher amount.
We are now borrowing only 1.5 times our salary.
Welshbeef said:
I know of 1 couple who earn a solid c£45k each and have £30k deposit and just cannot even get a £250k mortgage... it is tough out there, 4 years ago they could easily bought on 95% LTV & easily 5times total mortgage would have been £450k + deposit. ...
It's not just income and deposit that goes into formulating a lenders decision ;0)Sarnie said:
It's not just income and deposit that goes into formulating a lenders decision ;0)
You can have plenty of security and provable ability to repay but the lender needs to have 'appetite'. Like a starving tramp who's made himself sick eating bin-rubbish and hasn't any appetite for the creation of a Michelin-starred chef, a humiliated lender who's wasted billions on property nonsense may well have no appetite for a sound and secure property deal. NorthernBoy said:
Because of the max LTV on my mortgage the surveyor's valuation has capped the size of the mortgage to below what I wanted.
It's a bit weird, they waved far more in our faces at the application stage than we wanted, and then knocked it well back after the survey, almost as wish they never really wanted to lend the higher amount.
We are now borrowing only 1.5 times our salary.
Not weird at all.It's a bit weird, they waved far more in our faces at the application stage than we wanted, and then knocked it well back after the survey, almost as wish they never really wanted to lend the higher amount.
We are now borrowing only 1.5 times our salary.
Once they know you can cover the interest payments a bank is 100% concerned with protecting their investment.
LTV is the only way they know how.
So deposits count!!!
You are still perfectly qualified to borrow well more than 1.5x.
BUT you need far more deposit to make the LTV math make sense.
Last time LTVs were ignored and we all know how well that turned out...
davidjpowell said:
If it's not one of these firms, it is equally possible that whichever Surveyor sees it will look at Sold prices (which are freely available). Just depends how easy it is to compare, as these are less detailed, so unless you know that it's the same house type there can be doubt. (Google Streetview now a help).
I think any surveyor will be protecting himself by looking at freely available comparables - after all, even before the Land Reg made available the data so openly it was local knowledge of actual transaction prices which gave rise to valuations.And most buyers are sufficiently clued up to look up sold prices too; if they're on Rightmove to find a house, they can do so at the same time.
NoelWatson said:
groak said:
may well have no appetite for a sound and secure property deal.
Do we have any examples of this?
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